Country Report: Taiwan

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In the Global League

"Fostering the development of the pharmaceutical and biomedical industries holds a central importance within President Tsai's strategic vision to build Taiwan's new economic model", firmly announces Tsung-Tsong Wu, minister without portfolio of the Republic of China (Taiwan) who supervises and coordinates the country's interministerial program for the development of the biomedical industry. "As a matter of fact, these two sectors were included in Taiwan's '5+2 Industrial Innovation Program', which aims to prioritize resource allocation to five innovation-centered industries that are set to nurture the long-term growth of our country's economy," he continues, before stressing that "the commitment of Taiwan's government toward the development of the pharmaceutical, biotech, and biomedical industries is probably unrivalled in the world".

A SENSE OF PRIORITIES

Since May 2016, the 23-million inhabitant island, whose remarkable economic development over the past three decades has been essentially propelled by the tremendous growth of its semi-conductor industry, is headed by an executive duet that displays eye-catching experience in the pharmaceutical and healthcare fields: President Tsai Ing-wen, who was the former chair of one of Taiwan's most successful biotech companies, TaiMed Biologics, and Vice-President Chen Chien-jen, a famed epidemiologist, former minister of health and vice president of Academia Sinica, Taiwan's premier research institution. "From the very beginning of her campaign, President Tsai has been closely working with industry leaders, researchers and investors to further build up Taiwan's medical sector," adds Chih-Kung Lee, Taiwan's minister of economic affairs, while Carol Cheng, COO of TRPMA, the association gathering 28 local, R&D-driven companies, confirms that "even before President Tsai's election, TRPMA and her campaign team were already discussing crucial reforms that could be implemented under her tenure, especially with regards to labor and corporate regulations – and this privileged and preserved flow of communication now stands as a great asset towards our common objective to boost Taiwan's biotech capacity."

Tsung-Tsong Wu, minister without portfolio of the Executive Yuan, Republic of China (Taiwan)

Although the local pharma and biotech sectors have yet to display the type of success story of Taiwan's semiconductor industry, these companies have already reached a particularly interesting level of maturity, notably driven by the substantial investments injected by Taiwan's successive governments over the past two decades. "The total market capitalization of local, publicly listed biotech companies has increased 700 percent since 2008", recalls Johnsee Lee, chairman of the Taiwan Bio Industry Organization, which notably organizes the annual BioTaiwan conference – one of the largest biotech-related events in Asia. "The market capitalization of Taiwan's healthcare-related industry amounted to around NTD 200 billion [around USD 6.5 billion] in 2016. If we continue to sharpen the attractiveness of our biomedical ecosystem and adapt the government's support to the evolving needs of our pioneering companies, reaching a capitalization of NTD 1000 billion [around USD 32 billon] within the next decade clearly stands as a reachable objective," states Minister Wu.

Chih-Kung Lee, minister of economic affairs, Republic of China (Taiwan)

In light with this vision, Taiwan's government has already triggered a comprehensive effort to upgrade the country's regulatory framework. The first aspect relates to further deregulating the country's capital and investment sectors, one of Taiwan's main strengths from an international standpoint. "Over the past decade, many countries have been trying to build a viable and vibrant biotech stock market. In this regard, Taiwan has truly managed to establish the hottest viable biotech financial market for small biotech and medtech companies – outside of the US, the unsurpassable leader," highlights Hong-Jen Chang, current CEO and chairman of YFY Biotech Management Company, a Taiwan-based VC fund that has been playing an instrumental role in the development of the local biotech industry. While being able to go public before registering profits has encouraged biotech startups to list early, PwC estimated in 2015 that biotech accounted for 19 percent of the listed companies in Taiwan, compared to respectively seven and six percent of China's and Hong Kong's listed companies. Still on the regulatory side, the Legislative Yuan also recently underwent the revision of Taiwan's Biotech and New Drug Development Act. "Previously, only new drugs and advanced medical devices were being fiscally incentivized through tools such as tax rebates. Now, a third category has been added to the Act - new biomedical technology, which covers precision medicine and cell and gene therapy technologies," explains Taiwan Bio's Johnsee Lee.

Carol Cheng, chief operating officer, TRPMA

Aligned with the international ambitions of a local industry that cannot content itself with a limited domestic market, the government is also embracing the evolving needs of Taiwan's most advanced companies. "By adapting our tax incentives and immigration processes, we want to encourage international professionals and experts to come to Taiwan and help our innovative companies to get the human resources they need to compete on the global stage," explains Minister of Economic Affairs Lee. While government also put in place closer monitoring and stronger support towards all significant investments coming into Taiwan, direct government funding for innovative companies is far from running out. "Around 13 percent of this year's budget is specifically allocated to support flagship projects from these 5+2 innovative industries that are set to drive our country to new heights. Precision medicines, including companion diagnostic devices, are for example eligible to be supported by this exceptional fund," details Lawrence Gan, president and CEO of Taiwan's Development Center for Biotechnology (DCB) and its 260 R&D scientists, an organization that truly operates as the R&D branch of Taiwan's biotech capacity, focused on new drug discovery and the pre-clinical development of pharmaceuticals, biologics, and botanical drugs.

Nevertheless, in Taiwan, the development of the local industry now clearly stands as a shared responsibility that is not solely weighing on the shoulders of the economic arm of the Taiwanese government. "We recently decided to follow the example of the US and establish the promotion of the local industry as one of the key missions of the Ministry of Health and Welfare, in addition to their historical responsibilities for the evaluation of product safety and efficacy," explains Minister Wu. "In this regard, our renewed ambition to speed up market approval and reimbursement timelines will contribute to sustain the development of local, R&D-driven companies, as most of them look at bringing their products to the Taiwanese market in parallel to other key international markets," highlights former minister of health and welfare, Lin Tzou-yien. "Nevertheless, heightened regulatory support should be provided at the very early stage of the drug development process, by following the way of the US FDA and its "breakthrough therapy designation," complements TRPMA's Carol Cheng.

Hong-Jen Chang, chairman & CEO, YFY Biotech Management Company

"Propelled by the excellence of our physicians and scientists, combined with the quality of our medical infrastructure, Taiwan's overall research capacity has been progressing fairly rapidly over the past few years," adds Minister of Economic Affairs Lee, and "as such, Taiwan can truly stand the comparison with some of the most developed countries in the world, including Japan." While biopharmaceutical companies can already leverage the sheer amount of data accumulated by the National Health Insurance (NHI) for the development of personalized medicines, the country's efforts to ensure its regulations are perfectly aligned with the most stringent international standards also create a particularly favorable context for local companies. "Thanks to its strong regulatory system and well-developed clinical research environment, local companies can conduct early and mid-phase trials in Taiwan and use this data for a Phase III study in the US or in the EU," explains Albert Liou, vice chairman, Asia Pacific, at PAREXEL, whose APAC headquarter is located in Taiwan. "For agencies like the Center for Drug Evaluation (CDE) and Taiwan FDA (TFDA), international collaboration is now a priority, and this remarkable openness also contributes to propelling our local industry onto the global stage," he concludes.

Johnsee Lee, chairman, Taiwan Bio Industry Organization; president & CEO, Personal Genomics

INTO THE GLOBAL INNOVATION RACE

"In Asia in general and in Taiwan in particular, the current innovation drive has been nurtured by the increasing number of returnees, who – after having studied in the most prestigious universities and worked for some of the most advanced biopharmaceutical companies globally – come back to their home country and leverage easily-accessible private equity or government-backed funding to launch their own biotech companies," analyses PAREXEL's Albert Liou. This experience, honed in the EU and US naturally contributes to accelerating the development of Taiwan's biopharmaceutical companies. "My perception is that, initially, Taiwan's biotech industry followed the path of the very successful domestic electronics and IT sectors, which first gained international momentum by copying American products and manufacturing them at Asian costs – before eventually following a true innovation-driven strategy. In the biotech sector too, the mentality has been changing recently and the country has been rapidly catching up in terms of innovation capacity," documents Guo-Liang Yu, executive chairman of Crown Bioscience International, a world leading company in drug efficacy testing that has been building an unrivalled capacity in patient-derived xenograft (PDX) cancer models.

This innovation focus, initially triggered by some pioneering companies in the early 2000s, has already started to bear its fruits. In this vein, PharmaEngine's innovative oncology product received US FDA approval in October 2015 and was moreover included in the guidelines of the National Comprehensive Cancer Network® (NCCN®), an alliance of 27 of the world's leading cancer centers, as a category 1 treatment option for pancreatic cancer in May 2016. "Looking at our return on investment, we licensed-in this product in 2003 for USD three million and licensed it out for USD 220 million of milestone payments as well as tiered royalty payment based on the net sales in Europe and Asia," explains PharmaEngine's CEO, Grace Yeh, while the company now holds Ipsen (US market) and Shire (worldwide without US and Taiwan) as commercial partners for the product.

Considering that 225 drugs developed by Taiwan-based companies are currently undergoing clinical trials, including more than 115 products that already received an IND approval from the US FDA, new groundbreaking treatments should soon reach the global stage. OBI Pharma, for example, is competing against world's leading biopharmaceutical companies in the development of active immunotherapies in oncology. Although the Phase II/III trial of its investigational vaccine in patients with metastatic breast cancer did not meet its originally designed primary endpoint, "patients who demonstrated an immune response (IgG or IgM) showed a highly significant improvement in progression-free survival – and this represented around 50 percent of the patients involved in the trial," explains OBI Pharma's general manager Amy Huang, prompting the company to strongly believe that this product can benefit certain types of cancer patients, who can actually produce enough antibodies to fight the progression of the disease. "KOLs we met at the 2016 annual meetings of the American Society of Clinical Oncology (ASCO) and the European Society for Medical Oncology (ESMO) truly encouraged us to move forward on the development of our product and start global phase III trials," she continues, while the company is now collaborating with international regulatory agencies to design the protocol of this global phase III study.

Lawrence L. Gan, president, Development Center for Biotechnology

Other ambitious Taiwan-based companies are also targeting frontier mechanisms to tackle tumor development: TaiRx's CVM 1118, for example, is a New Chemical Entity (NCE) which "looks at halting vasculogenic mimicry, a tumor development process that used to be a moot point among oncology researchers before being now widely accepted by the scientific community", explains Du-Shieng Chien, president & CEO of TaiRx. "Vasculogenic mimicry relates to the now-proven capacity of highly invasive and genetically deregulated tumor cells to create their own blood-delivering tubes, independently from classical angiogenesis. The tubes that these smart tumor cells build are dangerous not just because they allow them to receive needed blood: they also foster the migration of tumor cells to new parts of the patient body (metastasis), which is responsible for most cancer deaths," he continues, while TaiRx's CMV 1118 became in 2015 the first drug in the world targeting vasculogenic mimicry to enter phase-I trials in the US and in Taiwan. "Looking forward, we now plan to start phase-II trials in the US in 2017", adds TaiRx's Chien.

Albert Liou, vice chairman, Asia Pacific, PAREXEL International

In the meantime, Senhwa is advancing the clinical development of CX-5461, a novel molecular targeted agent which induces tumor cell death without impacting normal cells, as it can activate pathways of both the Pol I inhibitor and G-quadruplexes to target cancer development. "G-quadruplexes (G4s) sequences are highly prevalent in the human genome and are involved in DNA replication, gene expression and regulation, telomere/chromosome maintenance and genomic instability. When the G4 structure is stabilized by drug-like molecules, it may cause replication fork stalling, DNA breaks, and transcription–replication collisions, resulting in tumor cell death. Therefore, the development of novel stabilizers of G4 stands as an exciting anticancer approach in the potentially broad clinical applicability," details Senhwa's president & CEO, Tai-Sen Soong. While ongoing clinical studies of CX-5461 for breast cancer (phase II), and hematologic malignancies (phase I) respectively won sponsorships from Canada's Stand Up To Cancer (SU2C) and Australia's Peter MacCallum Cancer Centre (PMCC), Senhwa's other product CX-4945, a selective, small molecule inhibitor of Casein kinase 2 (CK2), was granted US FDA Orphan Drug Designation in December 2016 for the treatment of advanced cholangiocarcinoma. "Phase I/II clinical trials have been underway globally, with CX-4945 used in combination with first-line chemotherapies - gemcitabine and cisplatin - in an attempt to block DNA repair of tumor cells and enhance the sensitivity of cancer cells to these anticancer therapies," says Senhwa's chairman Benny Hu.

Guo-Liang Yu, executive chairman, Crown Bioscience International

Taiwan's utmost innovation capacity is not limited to the oncology field, as two of SyneuRx's schizophrenia products under development have already been granted breakthrough designations by the US FDA, in December 2014 and November 2015, a recognition that is particularly rare for CNS products. In this field, Charsire Biotechnology however chose to leverage the country's talent pool and expertise in botanical new drugs and the increasing recognition of these products' therapeutic potential in the West. "BAC, our botanical new product for vascular dementia and Alzheimer's disease, received approval by the US FDA for a phase II clinical trial," reveals Chih-Yi Weng, Charsire's chairperson and CEO. One of the key specificities of this product lies in its dosage form: "BAC is a topical application drug, while most other pharmaceutical companies active in the CNS field are concentrating their efforts on oral drugs. As a topical product, it will then hold the great advantage to be easily combined with other oral products taken by patients," she adds.

Grace Yeh, president & CEO, PharmaEngine

Taiwan's biotech market is also transforming the delivery of health by embracing innovation for diabetic kidney disease. Bio Preventive Medicine (BPM), a leading company in the renal biomarker area, helps in the development of new drugs in the renal area and renal safety. "The diagnostics of DKD are important as around half of the population with end-stage renal disease (ESRD) have their kidney diseases derive from diabetes. Around 30 percent of patients with diabetes develop DKD... Therefore, it is very important to use a new test to identify the development of DKD as early as possible," states Karen Tseng, BPM's CEO. "Due to a lack of evaluation tools for the renal efficacy of DKD drug development, BPM's technology provides the solution; this is our market opportunity," she adds, while addressing their recent partnership success: "We have entered into a partnership with Boehringer Ingelheim (BI) where DNlite technology is used to evaluate renal effect in a phase IIIb global clinical trial in T2DM patients."

Amy Huang, general manager, OBI Pharma

For another Taiwanese success story, Foresee Pharmaceuticals, global partnerships have been key. These partnerships include a recent deal with Ferring and joint ventures with ScinoPharm and Pierre Fabre. This fully integrated pharmaceutical company is driven by the need to help patients through its innovative technologies - Drug Delivery Technology (stabilized injectable formulation (SIF)) and Rational Drug Design (novel new drug development (NCE)). Their injectable drug FP001 for Prostate Cancer successfully achieved its primary efficacy endpoint in the Phase III clinical trial this year. Foresee CEO Ben Chien describes how "phase III trials clearly indicated that with FP-001, testosterone concentration in advanced prostate cancer patients is suppressed, proving that treatment's efficacy data is similar to the existing products." Chien also highlights the convenience of their product: "Foresee's product is in a pre-filled syringe and ready to use, meaning Foresee's formulation has a more stable and user friendly profile." In terms of FP-025, Foresee's MMP-12 inhibitor for the treatment of asthma and Global Chronic obstructive pulmonary disease (COPD), Chien plans on leveraging the technology platform to ensure future growth: "Over the next 20 years, medical costs related to COPD will total approximately $800 billion in the United States, according to a study presented at the American Thoracic Society International Conference on May 2006, and there is no treatment available. MMP-12 is an enzyme that plays a key role in the recruitment of inflammatory cells, which consequently cause physical reactions and symptoms experienced with COPD... The favorable characteristics of the compound were mainly determined by the core MMP-12 mechanism, which as predicted showed greater direct action via inhibition and selectivity of the MMP-12 enzyme. The Phase II study of FP-025 is set to start by the end of the year."

Du- Shieng Chien, president & CEO, TaiRx

Finally, StemCyte, a global leader in the regenerative therapy field located in the US, Taiwan, and India, just released among the most impressive results in the history of spinal cord injury (SCI) treatments for a phase II clinical trial which aimed to prove the efficacy of the company's technology platform. "We have developed a patented process to extract mononuclear cells from cord blood units, as well as a patented storage technology and a unique transportation system to ship these cells all around the world," documents Jonas Wang, chairman and CEO of StemCyte and former vice president of research and technology at Johnson & Johnson. "Thanks to this in-house technology platform, mononuclear cells can be used up to five days after their extraction, during which we can guarantee a similar level of therapeutic efficacy, which stands as a real breakthrough: previously, transplants had to be used within 24 hours." StemCyte also plans to start the clinical development of its second R&D project in 2017, "for which we want to leverage the same technology platform to treat patients affected by chronic strokes – a market that is ten times larger than for SCI therapies" continues Wang. "We want to conduct the phase I clinical trial in Taiwan, the perfect country to conduct high-quality, cost effective clinical trials, where we will be able to easily access a large patient population," explains StemCyte's CEO and chairman Jonas Wang, while he plans that "StemCyte can easily become a billion dollar company if we manage to develop the aforementioned treatments for SCI and strokes."

THE POWER OF TECHNOLOGY

Leveraging Taiwan's remarkable talent pool in chemistry, some of the country's fastest-growing companies have been concentrating their efforts on technology platforms that allow them to develop a plethora of potentially game-changing medicines, rather than focusing all their resources on the risky development of a single, potentially groundbreaking product. "The true core of our company is our in-house developed technology platform, OralPAS®, a self-microemulsifying drug delivery system which allows the transformation of an existing, non-oral product (for example an injectable) into an oral dosage. In this regard, we clearly position ourselves as a technology-based biotech company rather than being focused on a specific therapeutic area," confirms CS Hsu, president of Innopharmax, which was ranked seventh fastest growing high-technology company in Taiwan by Deloitte's "2015 Technology Fast 500 Asia Pacific" ranking. "Our teams have developed our technology platform from scratch, an effort that has clearly paid off as we now hold many patents in various international markets, covering not only the commercial rights of our products but also their APIs," he says when analyzing Innopharmax' impressive year-on-year growth rate of 519 percent that made it one of the fastest-growing life sciences companies in the region in 2015. "The potential of our technology platform has been drawing the interest of a rapidly-growing number of international pharmaceutical companies over the past years, essentially from China or India but also from North America and Europe, and we are now involved in several commercial partnerships all around the world, " reveals Hsu.

Benny T. Hu, chairman, Senhwa Biosciences

InnoPharmax's focus on developing products complying with the requirements of the US FDA's 505(b)(2) NDA, an appealing drug approval pathway that avoids unnecessary duplication of studies already performed on a previously approved drug, is actually far from unusual in the Taiwanese biotech landscape. "By fully leveraging our proprietary technology platforms, 505(b)(2) products should bring great growth prospects to the company, as many crucial treatments are still only available through injectable and/or oral dosage forms around the world," confirms Howard Lee, chairman and CEO of Easywell Biomedicals, which was recently ranked the tenth fastest-growing high-tech company in Taiwan by the same Deloitte ranking, thanks to an eye-catching 367 percent growth rate in 2016. In this regard, Lee also highlights the importance of holding the global rights of all the company's products under development, "in comparison to some Taiwan-based companies that rely on in-licensed products for which they only own local rights". Besides being extremely rewarding, the process innovation developed by these companies' technology platforms also reveals itself as truly life changing. "In the US, there is so far no approved medicine for the treatment of cholangiocarcinoma, beside an injectable available under NCCN® guidelines. Nevertheless, after a 6-month chemotherapy, it is physically difficult for patients to handle the frequent injections as prescribed, while oral treatment are more convenient and lightly dosed than injectable products", explains Innopharmax's Hsu, as the company received in January 2016 US FDA Orphan Drug Designation for an in-house developed gemcitabine oral, which is about to enter a phase II trial. In the same vein, Easywell Biomedicals' transdermal Parkinson patch, for which the company started a Pivotal PK Clinical Trial in Malaysia, also holds mind-blowing market potential, as the global sales of the current oral treatment already amount to over USD 600 million. "By bringing a transdermal patch to the market, we expect to both ease treatment usage and increase patient adherence, meaning that market size should increase too. In other product categories, we already saw that the market entry of transdermal treatment form increased market size up to fivefold. In the past, most of the patches brought to the market were also more highly priced than oral dosages – usually around twice the price of the pill – as soon as the heightened efficacy and therapeutic advantages of the patches are clearly proven," anticipates Easywell's Lee.

Tai-Sen T. Soong, president & CEO, Senhwa Biosciences

Finally, this focus on in-house developed, proprietary platforms also comes with the broader ambition to develop a novel class of drugs holding greater targeting power and lower side effects than existing drugs. "In this regard, my long-term vision is to establish our company as a world-class design center for smart protein and peptide drugs, where scientists can leverage our Antibody Switch-on Cytotoxicity (ASC) platform to combine their research and turn it into marketable products, envisions Chen Min-Che, founder and managing director of Asclepiumm, whose ASC platform comprises a very innovative way to block or control intracellular signals. "To put it bluntly, this technology operates as an ASC shuttle that brings antibodies and peptides directly to targeted cells. As most existing effector molecules are cell-penetrating peptides, they are integrated with cell signaling regulation peptide functions after reaching their targets, while we found out during our animal studies that our technology platform enhanced effectors to reach the cells' nucleus and operate at the gene level," explains Chen. "As this ASC technology could allow us to control gene expression and protein interaction, we now want to develop our research capacity with the ambitions to develop ASC bio-drugs in areas such as oncology, anti-aging therapies, and tissue-specific hormones therapies, " he adds.

Guochuan Emil Tsai, founder & CEO, SyneuRx

Nevertheless, Taiwan's world-class scientific and technology capacities should not overshadow the importance of implementing the right commercial strategy. "In Taiwan, there is a popular saying which states that "it is easier to train a good scholar than a good businessman." This is precisely the challenge that our biotech sector is currently facing: Taiwan needs to be a pioneer in a way that goes beyond technology, which requires developing and implementing new business models that will allow our companies to rapidly stand out from the international competition," warns Minister of Economic Affairs Lee.

Chih-Yi Weng, chairperson and CEO, Charsire Biotechnology

THE TRUE SUCCESS FACTOR

Industry reviews spanning the last 15 years show that development timelines have been increasing, while the number of new drugs actually reaching the global market has been decreasing, prompting more and more companies to implement innovative business models and novel drug development approaches, notably based on a broader use of CROs, CRAs and other drug development partners and third parties. "The generalization of this new R&D pipeline approach, where drug development is licensed-in, then licensed-out, and simultaneously advanced by various partners and service providers in different countries, has strengthened the competitiveness of Taiwan's pharmaceutical and biopharmaceutical companies," considers Minister of Economic Affairs Lee, while PharmaEngine's recent success, based on a "No Research, Development Only" approach combined with a Networked Pharma structure, proves him right. "As part of this two-fold model, we do not hold a laboratory or a manufacturing facility, which further allowed the ramping up the development of the company and crucially reducing its cost structure. Looking at the drug development process, we license-in interesting compounds at the preclinical stage and license them out again when we receive positive results for phase II trials," documents PharmaEngine's Grace Yeh. First and foremost, this approach requires very strong competences in project evaluation. "With a business model essentially based on the in-licensing of early stage compounds, our enduring ability to identify the best compounds that we could integrate in our R&D pipeline – with regards to our technology capacity – is absolutely critical to nurture the long term growth of our company", explains Muh-Hwan Su, the general manager of SynCore Bio, the innovation-driven, oncology & dry AMD focused subsidiary of the Sinphar Group. "Such a business model also requires holding a deep and extensive knowledge of the global market, assessing the needs of patients and the healthcare community in all strategic geographies as well as anticipating their evolution for the next ten years," adds PharmaEngine's Yeh. "We indeed see that many emerging biotech companies out-license the development and marketing rights of their products once they get interesting phase II trials. However, they have limited resources and cannot take risk repeat clinical studies. In this regard, we are helping them better targeting and integrating the requirements of the reimbursement phase in the early design of the trials, so they can display more appealing clinical data, and, as a result, negotiate better deals," highlights PAREXEL's Albert Liou.

Tzu-Ling Karen Tseng, CEO, Bio Preventive Medicine

Although this innovative business approach is particularly appealing to investors, who are sometimes reluctant to wait for an entire R&D drug development program to end before receiving their return on investment, other Taiwan-based companies are however implementing a more end-to-end business model. "Bringing our in-house developed products onto international markets has been integrated into the core of our overall strategy from day one," explains Ko-Chung Lin, founder & CEO, of PharmaEssentia, which stands as one of the very first Taiwan-based, R&D-driven companies to develop its own marketing and sales capacity in the US and Japan, while the company also holds a manufacturing facility to produce its in-house developed interferon.

Nevertheless, be it through licensing agreements or the development of an integrated business model, most Taiwanese biotech companies embrace a global strategy – with a strong focus on the US market – at the notable exception of Taigen, one of the pioneers among the local R&D-driven industry. "My overarching goal has always been to secure market share in the rapidly growing Chinese pharmaceutical market, and we have now proven that TaiGen holds the experience and expertise needed to bring innovative products into this rather challenging ecosystem," documents Ming-Chu Hsu, chairman & CEO of TaiGen, which recently announced a joint-venture with Hong Kong–listed YiChang HEC ChangJiang for developing a treatment for chronic hepatitis C in the Greater China region, which is home to 25 percent of all HCV patients worldwide.

Ben Chien, chairman, president and CEO, Foresee Pharmaceuticals

Overall, the vast majority of these investor-backed, ex-nihilo biotech companies follow an organic growth approach, in a local industry context marked by a very low level of M&A activities. In this regard, Easywell's development approach truly emerges as an exception, as, under the leadership of its CEO Howard Lee - who is also a partner at the CID Group, one of the largest private equity firms in the region – and after several strategic acquisitions in Taiwan and in the US, Easywell now truly stands as an integrated healthcare company in the making, encompassing drug development, regenerative medicines, medtech products and also manufacturing facilities located in China (medtech products) and in the US (pharmaceuticals). "By holding the global rights of our promising 505 (b)(2) products, bringing to the market our innovative regenerative therapy for advanced wound care, and further enhancing synergies between our different business units, Easywell now displays a very limited risk exposure while targeting huge market niches which should deliver very promising growth rates for the upcoming years," expects its CEO.

Jonas Wang, chairman & CEO, StemCyte

In the meantime some industry players are reinventing themselves by starting new companies operating in complementary fields. For example, Formosa Laboratories Inc., an established API and UV-filters manufacturer, announced the set up of a new drug development company called Formosa Pharmaceuticals. "Formosa Pharmaceuticals will be an internationally focused company developing large and small companies. In terms of compounds, we have one oncology drug in Phase I trial; an IND (Investigational New Drug) approved by US FDA, as well as modified antibiotic drug and antibody drug conjugate under development" details Formosa's president, C.Y. Cheng. Formosa Laboratories, continuously focusing on the improvement of its core business and investments into new capabilities, will leverage years of experience to support the business of Formosa Pharmaceuticals. "Formosa Laboratories will remain the main shareholder in Formosa Pharma. I have to keep the business of Formosa Laboratories strong and stable to support the development of Formosa Pharma. One of our advantages is the fact that Formosa Laboratories is well established; not only can we provide the funding but also the support needed in drug development pathways; we can be a good API supplier and help with documentation. Formosa Laboratories will be the initial investor in the company; early next year we will also introduce our drug development arm as an investment opportunity for venture capital firms and private investors." The future success of Formosa Pharmaceuticals lies in its ability to distinguish individuals that can indeed perform in an efficient manner. "I am able to assemble people with the right experience, people that have been in this industry long enough; they know how to act in a systematic and prudent way and will not stick to failure for long. Thus, eventually, Formosa Pharmaceuticals will succeed and have a higher success rate than some of the younger companies just starting and learning their way through drug development."

Howard Lee, chairman, Easywell Biomedicals & partner, The CID Group

In Taiwan, the easy access to funding through institutional investors and/or stock markets usually avoid drug development companies to set up parallel commercial activities to fuel their R&D ambitions – a development approach that can however reveal itself being rewarding in the long-term. "We have indeed developed three main technology platforms in the areas of regeneration, circulatory disturbance, and anti-inflammation - and accordingly derived a premium portfolio of botanical skin & personal care products, whose rapidly increasing revenues have been nurturing our new drug development ambitions," explains Chih-Yi Weng, chairperson and CEO of the botanical new drug focused Charsire Biotechnology. "This allowed us to remain an independent, privately-owned company, while developing our in-house capacity throughout the entire value chain, from R&D to marketing and sales. More importantly, this commercial footprint now provides us with a direct access to users' feedbacks and a better understanding of their needs – which we can leverage when designing the specificities of our botanical new drugs," she adds.

C.S. Hsu, president, Innopharmax

Nevertheless, one should not think that Taiwan's R&D driven industry is exclusively composed of ex nihilo companies. "Many historical, well-established pharmaceutical companies are leveraging the important resources generated by their generics businesses to bolster new drug development activities, whether as the result of a fundamental strategic shift in these companies' R&D strategies or through the establishment of research-oriented subsidiaries," analyzes PAREXEL's Albert Liou. For some historical players, such as Sinphar, a top ten domestic pharmaceutical group with a footprint in China and North America, R&D ambitions actually go back to the beginning of the millennium. "In 2001, Tim Lee, Sinphar Group's chairman, decided to set up a cutting-edge R&D center comprising nano-technique development, microbiology and molecular biochemistry laboratories, as well as a dedicated R&D-driven subsidiary focused on innovative botanical drugs", explains Yita Lee, deputy chairman of Sinphar. "Leveraging this R&D experience honed with the successful development of innovative botanical drugs, we then moved to the NCE field and set up SynCore Bio in 2008, which now stands as the R&D-driven entity of the Sinphar Group," adds Muh-Hwan Su, chief technology officer of the Sinphar Group and SynCore Bio's general manager, while the latter is now focused on advancing its four drugs currently under clinical development (three in oncology, one in dry AMD). "We want to continue to integrate new projects into our pipeline, whether they would be developed internally, through our historical partnership with the National Healthcare Research Institution (NHRI), or any other licensing agreements," says Yita Lee, while SynCore holds the competitive advantage to be integrated within a well-established pharmaceutical group with international operations. "When it comes to dosage development, CMC, or product manufacturing, SynCore Bio can now fully benefit from the expertise that the Sinphar Group has been accumulating for forty years," confirms Yita Lee.

Min-Che Chen, managing director, Asclepiumm

There is however no obvious route for historical players holding NCE ambitions, and Synphar's decision to directly integrate an R&D-driven subsidiary remains particularly rare to date. "We recently formed a joint-venture company with one of Taiwan's leading oncologists and spearheaded the CMC of a new class II oncology therapy," explains PH Huang, chairman and CEO of JCP, a cornerstone household brand for numerous products in Taiwan's domestic market, most notably with CNS medications, which is now reinventing itself. "We chose this model because if you invest in new drug development as a public company, earnings per share will automatically be diluted, validating spin-offs as a much better alternative. Our JV partner is currently in charge of taking this candidate through phase II clinical studies, some of which will likely take place in the United States, " PH Huang says to illustrate the trial and error approach this five-decade old generic company has been implementing in the oncology segment.

HISTORICAL (COMPANIES') MOMENTUM

Entering the NCE field only stands as one growth strategy among many others for historical, generics-focused companies that want to overcome the limitations of their domestic market. "Through our distribution arm CYH, we already work with various international companies, including US and Japan-based players, which are eager to leverage the market knowledge of our sales force to launch and build their brands in Taiwan - without having to locally establish their own marketing and sales network," details Derek Wang, chairman of the board of the China Chemical & Pharmaceutical Group (CCPG), one of the leading pharmaceutical groups in Taiwan, which notably encompasses an API branch (CCSB), a generic focused company (CCCP), and then an autonomous distribution platform (CYH), which plays an active role in bringing in more innovative products to Taiwan.

Muh-Hwan Su, chief technology officer, Sinphar Group & general manager, SynCore Biotechnology

In parallel to in-licensing opportunities, domestic generics companies look at leveraging their utmost drug development expertise and manufacturing capacities to enter new markets. "Taiwan undoubtedly holds a very experienced generics industry that has already reached international standards, including the research and manufacturing capacity required to compete on the global stage," assesses Samuel Wang, honorary president of Taiwan Generic Pharmaceutical Association (TGPA). "JCP's new facility, which will ultimately triple our production capacity within the next two years, will have three focus areas: the first is extending our CNS drug pipeline; the second is targeting diseases related to aging populations, and the last is oncology", explains JCP's chairman and CEO PH Huang, while he overall plans to "leverage these added manufacturing capabilities to increase JCP's international presence and introduce the company's products into more overseas markets."

Ming-Chu Hsu, chairman & CEO, Taigen Biotechnology

In this regard, the internationalization strategy of generics-focused companies diverges substantially from the global market approach favored by biotech startups, as historical players' emphasis is undoubtedly regional, with the huge but challenging Chinese market in the crosshairs. "We actually entered the Chinese market at a pretty early stage in comparison to many of our competitors, which has allowed us to rapidly raise awareness around the quality of products and the excellence of our manufacturing capacity. In this regard, we have already bounded several promising distribution partnerships in the region with Chinese companies, which helps us to get a better grasp of the local market trends and needs, but also to better tailor our commercial approach to the specificities of this challenging market," details Kao Su-Chin Chang, founder and chairman of Weidar Chemical and Pharmaceutical. "As a Taiwanese company, we are undoubtedly in a privileged position to increase our market share in China, thanks to our culture and geographical proximity but also to the various regulatory agreements binding Taiwan and China's pharmaceutical sectors, although some of China's regulations still render market penetration more difficult than in other countries," she considers. In terms of new market entry, Weidar also wants "to accompany President Tsai's "New Southbound Policy" and strengthen its business operation in other ASEAN countries," adds Chang, before stressing that direct sales are not Weidar's only tool for increasing international revenues. "CMO activities represent up to 50 percent of our total sales, and ten percent of these activities are already conducted on behalf of international customers. Looking forward, we notably identify a strong interest from Japanese pharmaceutical companies in benefiting from the utmost quality and effectiveness of our manufacturing facility," she adds.

In this vein, industry-wide regional focus does not prevent some of the largest domestic generics companies from holding commercial ambitions in advanced markets. "Over recent years, one of our main objectives has been to increase our presence in the US and Japanese markets, where we have already started to successfully export high-potency drug products," details CCPG's Derek Wang. "We received our first US FDA ANDA in 2014 for an in-house developed osmotic controlled-release oral delivery system for an anti-hypertensive. In the mid term, we want to deepen our collaboration with both our US and Japan-based commercial partners and get more largely involved in the marketing and sales of our products," he adds, before stressing CCPG is also actively looking for acquisition opportunities to strengthening its vertical integration in these strategic markets.

C.Y. Cheng, chairman & president, Formosa

Nevertheless, when it comes to finished dosage forms, being truly competitive in the US market still stands as a particularly challenging endeavor. "None of Taiwan's leading domestic companies currently holds the critical portfolio size needed to be competitive in the US market, while we see that the those Taiwanese generics companies that have developed their marketing and sales network in the US have not yet been able to earn the returns on investment they had expected," analyses CCPG's Wang. "I have had the chance to meet with the heads of other leading domestic pharmaceutical groups to discuss a potential collaboration and jointly enter the US market. So far, we have however not been able to design a strategy that would be fully satisfactory to everyone," he reveals, while Fangchen Lee, chairman of YungShin Global Holding, another leading pharmaceutical group of companies in Taiwan, states that "if Taiwan's government could allocate just a share of the tremendous resources exclusively invested in our biotech industry to bring our domestic generics companies together, our country would have greater chances to give birth to a real pharma success-story within the next decade".

Yita Lee, deputy chairman, Sinphar Group

Is Taiwan's government too focused on nurturing the growth of biotech startups, to the detriment of historical, generics players? "Actually, this has been a recurring issue, as - even under the administration of former President Ma Ying-jeou - the government has directed the majority of their attention to pharmaceutical companies focused on innovative drug development," regrets JCP's Huang. "From a practical standpoint, increasing funding to the generics sector would subsequently increase R&D, notably for the development of new dosages and combinations, and, in turn, production output, while ultimately augmenting revenue streams to Taiwan," he continues, before adding that "compared to her predecessor, President Tsai Ing-wen has however been more receptive of generics players' concerns and has begun undertaking new initiatives that favor the domestic, generics industry. In this vein, TGPA's Samuel Wang highlights that "according to the numerous meetings our association already held with key members of President Tsai's government and administration, I am particularly confident generics companies will receive more support to develop our industry's capacity with regards to new formulations and new drug delivery systems".

P.H. Huang, chairman and CEO, Johnson Chemical Pharmaceutical Works (JCP)

In this regard, the current government seems to favor a collaborative approach between emerging biotech companies and historical manufacturers, be it through contract manufacturing partnerships, joint investments or joint ventures. "The overall expertise and capabilities of our manufacturing companies are absolutely world-class, and a great share of them already hold GMP, US FDA, EU EMA, or Japan CPMDA approved facilities – even for the manufacturing of complex products such as injectables. After the full implementation of the PIC/S GMP in 2015, we now want to help these manufacturers to further upgrade and develop their capabilities, in order to ensure they can become the manufacturing partner of choice of our biotech companies but also bolster their regional and international expansion," reveals Minister Wu.

THE DAWN OF A WORLD-CLASS ECOSYSTEM

As satisfactory as this collaborative approach may sound to the ears of generics players, it however perfectly illustrates the broader industry vision that the government strives to implement. "We want to accelerate the development of a comprehensive innovation ecosystem to sharpen the global competitiveness of our local companies, by strengthening the integration of our different innovation clusters and bolster the improvement of this industry's value chain," highlights Minister Wu. This objective notably targets the country's world-class biomedical located in Nangang [in the Taipei area, mostly focused on new drug development, e.d.], Hsinchu [commonly referred to as Taiwan's Silicon Valley, e.d.] and in Central and Southern Taiwan, which form the country's "biotech corridor". "Hsinchu Science Park was the first in Taiwan to establish a cluster exclusively dedicated to the life sciences industry, and the cumulated revenues generated by the companies established in our Biomedical Science Park increased by 140 percent from 2015 to 2016," explains its director general, Wayne Wang, while a new 12-storey building is about to see the light, ready to welcome new pharmaceutical, biotech, and medtech companies. Furthermore, as Hsinchu already stands as the heart of Taiwan's ICT industry, the further development of this biotech and biomedical cluster could foster an extremely promising interplay between these two pioneering industries, while cross-sector investments, research projects, and other partnerships could truly propel the development of Taiwan's "bio-ICT" sector, following the global convergence trend happening between the pharmaceutical and medtech sectors.

Samuel Wang, honorary president, Taiwan Generics Pharmaceutical Association (TGPA)

"Nevertheless, to the contrary of other advanced biotech eco-systems around the world, Taiwan still lacks of comprehensive, fully-fletched hubs, gathering within a close perimeter the entire biotech value chain, from emerging drug development companies to world-class service providers and cutting-edge medical and research capacities," considers Chuan-Der Huang, president & CEO of KriSan Biotech, a recently established service provider focused on new drug process and analytical R&D for small molecules and peptides from Pre-clinical (IND) to Phase II clinical trial. "As a result, these well-funded, publicly-traded biotech companies still struggle to find service providers aligned with their own standards, highlighting that besides the undeniable quality of our biotech companies, Taiwan's innovation value chain still needs to be substantially strengthened," he explains. "If Taiwan holds at least five API-focused companies; most of them are concentrating their efforts on large-scale API production," hence creating substantial market opportunities for local, specialized service providers in this field, which can leverage Taiwan's market needs to foster their own international development. "Only a few months after we started our operations, we are already working with 16 different customers, including two US and EU based companies, which truly proves that our unique positioning – combining Asian cost-efficiency with Western know-how – can also be extremely appealing on the international stage," explains KriSan's Chuan-Der Huang.

Derek S. Wang, chairman of the board, CCPG

In the meantime, biotech companies' focus on partnering with the best service providers globally sharpens the opportunity for the latter to establish a local footprint and benefit from the growing partnership opportunities that the Taiwanese ecosystem holds. "At the moment, our interactions with Taiwan's innovative companies are still emerging, but they will undeniably gain in intensity as the local R&D-driven industry continues to climb up the innovation chain and look at developing more and more innovative treatments in oncology," predicts Guo-Liang Yu, the executive chairman of the efficacy testing focused Crown Bioscience International. "In this regard, Crown can contribute to bringing international expertise and make the local industry benefit from our pioneering technologies and PDX models – this is exactly why we decided to set up an affiliate in Taiwan! If any company in Taiwan is developing innovative oncology drugs based on novel mechanisms of action, we can help them identify for which specific gene mutations and patients their compound will be the most efficient," he stresses.

Kao Su-Chin Chang, chairman, Weidar Pharmaceuticals

The Taiwanese government's ambition to attract more international talents and companies to undertake innovation-oriented projects in the country is palpable in this aspect, with the idea of building Taiwan's reputation as a world leader in some specific areas and become the partner of choice of international companies for their global R&D projects. "Attracting international investments is a global competition and we need to continuously sharpen our competitive advantages, which means further harmonizing our regulations, better positioning our country's offering vis-à-vis international healthcare demand, and generating new market opportunities for international companies," recognizes Minister Wu.

Fangchen Lee, chairman, YungShin Global Holding

In the meantime, there is a crucial need to develop Taiwan's open innovation culture, as such a collaborative approach encompassing both academia and the industry hasn't yet been embedded deep enough in the roots of the local ecosystem. "Taiwan undeniably holds world-class research and cutting-edge innovation capacities, while our biopharmaceutical eco-system has been accumulating a sheer amount of expertise over the past decade. Nevertheless, the impact of these twenty years of intensive R&D efforts could be further enhanced if local research institutions and international companies were partnering more comprehensively and at an earlier stage of the drug development process," explains Carol Cheng, COO of TRPMA, which just released bioIPSeeds, a groundbreaking, utterly safe digital platform based on the blockchain technology that aims to foster a greater collaboration between Taiwan's individual researchers and research institutes and the global industry (biopharmaceutical, medical devices, and all healthcare-related companies as well as venture capital companies).

In the country's ambition to truly play in the big league, Taiwan's last room for improvement probably relates to fostering greater consolidation among the local industry. "Our industry's next stage will be to expand more into the international arena and gain the critical size needed to truly fulfill our global ambitions. In this regard, one strategy that government and industry have been considering is to trigger a phase of mergers and acquisitions - to make smaller companies bigger and help them merge with international companies," highlights Taiwan Bio's Johnsee Lee. As a matter of fact, the government is currently revising the Business Merger and Acquisition Act, and in July 2016, a public-private fund worth NTD100 billion (around USD 3.15 billion) was set up to support M&A activities, notably in the life sciences field. "In the grand scheme of things, I am confident Taiwan's biotech and pharmaceutical ecosystem will further strengthen its regional leadership and global attractiveness over the upcoming years, while Taiwan-based success stories in the most advanced markets globally will continue to accumulate," concludes Johnsee Lee.

Chuan-Der Huang, president & CEO, Krisan Biotech